Equity markets dip and oil soars after US attack on Syria

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The United States launched a military strike from the Eastern Mediterranean Sea that targeted a Syrian air force base. US officials believe the same base is the origin of a chemical weapons attack. Assad allegedly carried out the attack against his own citizens in Western Syria. On Thursday evening Trump briefly addressed the press with a speech that included this key statement.

“Tonight I ordered a targeted attack from where this deadly chemical attack was launched.”

The President weighed a spectrum of options earlier in the day as reported by several news outlets including the AP and Reuters . The options ranged from the surgical strike all the way up to a prolonged bombing campaign. They also considered attacking Russian bought and paid for anti aircraft weaponry.  Trump seems to have chosen a campaign that was more of a strategic message rather than a largely debilitating attack that would have had the downside of civilian causalities.

Markets so far have acted as expected for such a situation with oil up approximately 1.75% and US markets down roughly .50%.

This attack comes a day after Trump removed Steve Bannon from his position on the National Security Council. Although there is no official word from the Trump administration it is not unfair to speculate that Bannon objected to such an attack. If that is true Bannon is not alone in his lack of support for a US led missile strike on Syria.

The Freedom Caucus weighs in

Many of the same voices in the so called Freedom Caucus, that just days ago dashed the hopes of the Trump administration passing a admittedly watered down version of repeal and replace of Obamacare, now were also loudly opposing a strike on Syria in retaliation for the chemical weapon attack that killed 50 or more Syrian civilians.

Some of the loudest voices were Republican House Rep. Thomas Massie who stated on CNN, “Frankly I don’t think Assad would have done that [because] it would tend to draw us [The United States] into that war even further…the airstrike was on an ammo dump [stockpile] so I don’t know if it was released in the attack on the ammo dump…it is plausiable.”

“Short of Congress voting on it I’m opposed to illegal and unconstitutional wars, I have not seen any of the evidence (that generated the horrific result we see in the pictures of dead children) and I think it is probably true but I would like to see the evidence have a debate on the floor and then vote on an action.” The interviewer followed up with Paul, “You want a vote even if it is only a very limited action?”

To which Senator Paul responded, “that is what the Constitution says…”

This administration is carrying forward the precedent set by President George W Bush and President Obama before them. They are carrying out acts of war, however limited they may be, without the approval of Congress.

From a market perspective I believe that this is a negative because it creates even more uncertainty in a region that shapes energy prices worldwide.